The award was first established by the Library Association in 1936, with the innagrual winner being Arthur Ransome, for his Pigeon Post, and named in honour of Andrew Carnegie. Carnegie was a Scottish-born industrialist, who made his fortune in the US Steel industry and later used his wealth to endow a number of free libraries across the English speaking world.

For the 70th Anniversary of the Carnegie Medal in 2007 the Institute decided to launch its own Carnegie of Carnegies. A panel of experts selected a shortlist of the ten best winners over the first seventy years of the award, and individuals were invited to cast their vote on the Carnegie website for their favourite work. In the end a total of some 5,000 votes were received from across the world, and the winner announced on the 21st June 2007 was Northern Lights by Philip Pullman which attracted 40% of the vote against 16% share for the runner up Tom's Midnight Garden by Philippa Pearce.